When the Boston Globe reported on November 3 that two Massachusetts healthcare organizations—the Boston-based Steward Health Care System and the Brighton-based Mount Auburn Cambridge Independent Practice Association (MACIPA)—were leaving the Pioneer ACO Program, that dual development became the latest in a series of worrisome developments around what had started out as a showcase program for innovative accountable care organizations (ACOs).
Indeed, the launch of the Pioneer ACO Program, even more than the launch of the Medicare Shared Savings Program (MSSP), both sponsored by the Centers for Medicare & Medicaid Services, under terms of the Affordable Care Act (ACA), had created a frisson of excitement at its inception back in 2012. And even on August 25, 2014, CMS officials were able to crow about some of the results coming out of the Pioneer ACO Program, when they announced on CMS’s website that “The Centers for Medicare & Medicaid Services today issued 2014 quality and financial performance results showing that Medicare Accountable Care Organizations (ACOs) continue to improve the quality of care for Medicare beneficiaries, while generating financial savings. As the number of Medicare beneficiaries served by ACOs continues to grow, these results suggest that ACOs are delivering higher quality care to more and more Medicare beneficiaries each year.”
As CMS noted last August, “The 20 ACOs in the Pioneer ACO Model and 333 Medicare Shared Shavings Program ACOs generated more than $411 million in total savings in 2014, which includes all ACOs’ savings and losses. At the same time, 97 ACOs qualified for shared savings payments of more than $422 million by meeting quality standards and their savings threshold. The results also show that ACOs with more experience in the program tend to perform better over time.”
Still, the news this week was probably quite bitter for CMS officials, given that, with the departure of Steward and Mt. Auburn, the Pioneer ACO Program is now down to 16 participating organizations, or precisely half of the cohort of 32 that had started out in the program in 2012. Like several other ACOs, these folks in these two ACOs are switching programs, not dropping out entirely: both Mt. Auburn and Steward are shifting over to the new Next Generation ACO program, beginning on January 1, 2016. And in fact, as has been pointed out, “ACOs in the Next Generation ACO Model will take on greater financial risk than those in current Medicare ACO initiatives, while also potentially sharing in a greater portion of savings,” as Rajiv Leventhal’s news report noted. Indeed, the Globe report mentioned that according to the two organizations, “The rules make it more financially attractive to them than the earlier program,” referring to the Next Generation model.
Still, the challenges were there in Pioneer. The Globe reported that Mount Auburn Hospital’s physician network had saved about $14 million over three years in the Pioneer program, but it expected to lose money under new rules that reduced the budget it would have received to care for patients, according to Barbara Spivak, M.D., president of MACIPA.
So, not surprisingly, it is the financial challenges in Pioneer that are continuing to frustrate participating organizations. And these organizations are being led by people who are profoundly committed to the idea of accountable care. I interviewed executives from both Steward and Mt. Auburn for our August/September 2014 cover story. Asked why she and her colleagues decided to plunge into the Pioneer ACO Program, she told me last summer, “There were several reasons. One was that we as an organization believe that managing the care of patients provides better care, and that in order to effectively manage the care, you need to get data from the health plans. Particularly in an environment like ours where there is a lot of fragmentation of care, even more in the senior population than in the younger population, it’s very important to get information on where they’re going. And if you’re going to enhance their care, somebody has to pay for that. And the only way to get that is to enter into some sort of risk contract with a payer, in this case, Medicare.”
Meanwhile, Dominique Morgan-Solomon of Steward, told me in the cover story that “What we learned early on is that about 30-40 percent of our population in the MSSP is changing every year; that’s really significant, and it makes you really think about how you impact ACO members right away. Typically,” she told me, “with care management and population health, you’re trying to institute interventions upstream, and that’s challenging. Interestingly, while the majority—though not all—of our MSSP ACO members are over 65, one of the things we’ve learned [in participating in the MSSP program is that] while you’d think there would be a lot of differences between the Medicare and commercial populations, we’ve learned that there really haven’t been a lot of differences. So we’ve learned a lot and have been able to institute infrastructure that goes across payers, and the infrastructure has become somewhat payer-agnostic. Because really, the high-risk diabetics are such that all the programs tend to be applicable. And I think the team was a bit surprised by that.” That area of learning came after the initial hurdle of ensuring accurate attribution (making sure that ACO patients were correctly identified), something that every executive interviewed for this article agreed inevitably poses a strong initial challenge.”
Obviously, at a certain point, the Mt. Auburn and Steward leaders realized that the math was simply not working for them. And math is at the core of the dissatisfaction that ACO leaders are feeling with the Pioneer program. Take, for example, San Diego-based Sharp HealthCare’s abandonment of the program last August. Alison Fleury, CEO of Sharp’s ACO, told California Healthline that, even as her ACO had reduced readmissions and improved its quality metrics, the math of the financial requirements in the Pioneer program was simply too daunting. She told California Healthline that, “Because the Pioneer financial model is based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO despite favorable underlying utilization and quality performance.’” “The California Healthline article,” I noted in a blog published shortly after the Sharp announcement, “went on to note that San Diego’s area wage index had increased by 8.2 percent between 2012 and 2014, but because the Pioneer model does not take that into account, health systems have not received amplified regional payments.
And as I further noted in that same blog, “With regard to that model, I’ve just spoken with a source who is very familiar with the situation, and who has confirmed to me that the concern stated by Alison Fleury was indeed one of the main concerns among Sharp HealthCare leaders. And yes, the devil always is in the details in these arrangements.”
So here’s the thing: senior officials at CMS need now to carefully consider how to move forward with the Pioneer ACO Program. Yes, I totally understand their insistence on some level of programmatic rigor above the level of the main MSSP (Medicare Shared Savings Program for ACOs), and even above that of the new Next Generation ACO program. At the same time, they are potentially facing a collapse of the Pioneer program, if they insist on maintaining the program as it now stands, particularly as they go into years four and five of the program. And the fallout from a program collapse would surely be worse than a slight relaxation and reboot of the program, would it not…?
This seems honestly to be one of those cases where, faced with a Scylla and Charybdis choice, federal healthcare officials really could go in any direction. But the fact that such smart, dedicated organizations as Steward Health Care System and Mount Auburn Cambridge IPA—not to mention Sharp HealthCare and all the others—can’t make the numbers work under the Pioneer program, speaks volumes. It’s time for CMS officials to rethink and tweak; it’s not necessary to abandon the program, and indeed, tweaking right now is so very important, to keep the remaining participant ACOs in the Pioneer program. Because when CMS officials “do the math,” they’ll see that half a loaf of bread really is better than no loaf (or even any slices) at all.